NEW DELHI: Based on one of the largest surveys of Indian non-profits on flexible funding, Change Engine’s report, The Flexible Funding Gap for Non-Profit Unicorns, estimates that India will need $750 million in flexible funding over the next five years to build 100 non-profit unicorns. This equates to $150 million a year, just 1% of India’s philanthropic giving. Non-profit unicorns are organisations capable of reaching one million people or 5% of their target user base.
Part of the Ease of Doing Good series, the report finds that nearly 80% of the surveyed organisations struggle to scale due to the lack of flexible capital (non-programmatic capital that organisations can use to build teams, invest in systems, experiment with new models, and plan for the long term).
Key findings at a glance:
- Lack of flexible funding: 80% of surveyed non-profits struggle to scale due to lack of startup-style innovation capital; 1 in 2 organisations have less than 10% unrestricted capital.
- Restrictive regulations: 55% cite regulation as the primary constraint for raising unrestricted (i.e. not tied to a program) funds, followed by a poor understanding of non-profit cost structures and benchmarks amongst funders.
- Limited sources: 55% organisations raised flexible funding from HNIs and only 33% from domestic foundations. Also, domestic foundation funding is skewed in favour of large organisations (with budgets more than Rs 5Cr.), leaving very few sources of capital for early-stage organisations.
- Small cheque sizes and one-time grants: 60% organisations reported that typical cheque sizes are less than Rs 10 lakhs, and most of these grants are one-time.Only 4 in 10 domestically funded organisations have ever received a multi-year grant. Just 2 in 10 surveyed organisations secured more than ₹50 lakh in multi-year support.
- Flexible funding is innovation funding: If teams had more flexible funding, 75% would invest in hiring talent, 32% in bolder experiments, 27% in technology and data, the survey highlights.
This funding rigidity forces organisations to spend disproportionate time on fundraising, rather than focusing on innovation and impact. The issue is not the absence of capital but how it is designed and deployed. Respondents indicated that with greater flexibility, they would invest in strengthening core teams, prioritising innovation, pilots, and evidence generation.
Varun Aggarwal, Co-founder, Change Engine, said, “Beyond doing good to society, non-profits are also economic enablers. Funders must fund non-profits like startups, providing flexible funding to nurture innovative solutions to have a population-size impact on the deepest problems of India. Unrestricted capital gives non-profits the freedom to experiment, adapt, and innovate, enabling solutions rooted in the realities and evolving needs of the communities they serve.”
Shubham Bansal, Co-founder of Change Engine, added, “India has produced more than 100 startup unicorns through patient, risk-tolerant capital. If India is to meet its social development goals (SDGs), it needs a comparable number of non-profit unicorns to drive impact at India’s scale. Lack of flexible funding is one of the biggest bottlenecks for non-profits to scale. The capital exists; what’s needed now is the willingness of funders to deploy it differently and support of policymakers to ease regulatory constraints.”
To bring about systemic change, Change Engine proposed the following recommendations to the funders, ecosystem builders and policymakers in the report:
Funders:
o Domestic foundations as long-term partners: Domestic foundations should shift from one-year grants to 3–5-year commitments as the default, with a target of making 90% of grants unrestricted and dedicating a proportion of funding for early-stage organisations.
o HNIs as angel philanthropists: High-net-worth individuals need to back non-profits like startups, with cheque sizes above ₹15 lakhs to support non-profit innovation and organisation building.
o CSR leaders as innovation funders: Corporates should allocate 25% of CSR budgets to research and innovation, fund the full cost of delivery, including core team and technology, and milestone-based funding models for smaller organisations.
Policymakers:
o Revisit the 20% cap on income from economic activities, which currently limits non-profits’ ability to build sustainable revenue streams.
o Reduce the three-year track record requirement to one year or introduce pilot pathways to enable CSR access for early-stage non-profits.
o Create a Fund-of-Fund structure for innovation grants to non-profits similar to what we have for startups. Rather than directly funding organisations, the state could seed and match specialised philanthropic funds that provide multi-year, flexible innovation capital to scalable non-profits.
(India CSR)
